The Australian Federal Budget for 2024-25, presented by Treasurer Jim Chalmers, forecasts a surplus of $9.3 billion for 2023-24, with a projected deficit of $28.3 billion for the following year. The Budget also anticipates the unemployment rate will rise to 4% this year and increase to 4.5% by 2025-26. Let’s take a closer look at some of the specific announcements made in this Budget.
Cost of Living Relief
A prominent feature of the budget is a $300 energy bill relief for households. While this relief has been welcomed, it has also sparked controversy due to its broad, non-targeted application, raising questions about the efficiency of addressing the cost-of-living crisis.
There is also a 10% increase in Commonwealth Rent Assistance, along with a one-year freeze on the maximum PBS co-payment for medicines.
Taxation
The budget rolls out previously legislated tax cuts starting July 1, 2024, which are designed to lighten the financial load across various income brackets. Here’s how the new tax structure will look:
| Tax Rate | Taxable income |
|---|---|
| Nil or Tax Free | $0 – $18,200 |
| 16% | $18,201 – $45,000 |
| 30% | $45,001 – $135,000 |
| 37% | $135,001 to 190,000 |
| 45% | $190,000+ |
The tax savings for individuals earning between $40,000 and $200,000 range from $654 to $4,529, respectively. We discussed these tax cuts in details and the planning opportunities earlier this year. You can read more about them in the following articles:
Small Businesses
The budget extends the instant asset write-off until June 30, 2025, encouraging small businesses to invest in new assets by offering immediate deductions for eligible expenses. It’s important to note that this measure still need to be passed through Parliament to become legally binding. Additionally, small businesses are offered a $325 electricity rebate, helping to mitigate rising energy costs.
Support for Families
Starting July 1, 2025, superannuation contributions will be paid on Paid Parental Leave, enhancing financial security for parents during early parenthood. This measure is part of broader efforts to address the difference in superannuation balances and pay inequity between men and women during parental leave.
Housing and Infrastructure
The government commits $6.2 billion to various housing initiatives, aiming to support the construction of 40,000 social and affordable homes and streamline processes to attract foreign investment.
Student Debt
In a substantial move to ease cost-of-living pressures for younger Australians, the government has committed to wiping out almost $3 billion of student debt. This bold measure is expected to benefit more than three million Australians, significantly reducing the financial strain associated with higher education expenses. This reduction in student debt not only promises immediate financial relief for graduates but also aims to enhance their economic participation by freeing up resources that can be invested in other areas of personal and professional development.
Education and Job Support
Funds are allocated for fee-free TAFE places and pre-apprenticeships to enhance the skilled workforce in essential sectors like construction. The budget also includes measures to reduce HECS debt for approximately 3 million graduates, supporting both recent graduates and current job seekers.
Future Investments and Economic Growth
Central to the budget is the “Future Made in Australia” initiative, which involves significant investments in sectors critical to economic resilience. The government plans to spend $22.7 billion over the next decade on initiatives including:
- Production tax incentives for hydrogen and critical minerals.
- Support for domestic manufacturing of solar panels.
- Investments in technology sectors such as quantum computing.
These investments are designed to bolster Australia’s economic growth and position in global markets.
NDIS
To ensure the sustainability of the National Disability Insurance Scheme (NDIS), the government is implementing reforms, including ending automatic top-ups when participants exhaust their funds. These measures aim to control costs, projected to save $14.4 billion over four years, while continuing to support disabled Australians effectively.
Conclusion
The 2024-25 budget, with its mix of immediate relief and strategic investments, aims to balance short-term economic pressures with sustainable growth. As Australians evaluate these changes, the overarching goal remains to manage economic uncertainties with a thoughtful and responsive fiscal strategy. It will be particularly interesting to watch how these measures affect inflation and interest rates throughout the year. Feel free to reach out to us if you would like to discuss how the Budget potentially affects you, your family and your overall financial plan.
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Nick Shanley, Steve May, Luke Styles and Shanley Financial Planning T/A Steve May Financial Services are Authorised Representatives / Corporate Authorised Representative of Sensibly Pty Ltd, AFSL 533923. Please refer to our website at www.stevemayfs.com.au to reference our Financial Services Guides.
